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MLM Marketing

by whiteshadow1890 Banned
6 replies
Is Multi level marketing legal or illegal? And please explain your answer
#marketing #mlm
  • Profile picture of the author Charlotte Jay
    You'll have to elaborate on what you mean a little more before I give my answer.
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    • Profile picture of the author Vogin
      Your question is irrelevant since laws vary from country to country.

      Generally speaking, MLM without any product are just Ponzi schemes which are indeed illegal in many countries, while MLM with products (such as Amway) are perfectly OK.
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      • Profile picture of the author Alexa Smith
        Banned
        MLM is entirely legal (and officially recognised and regulated) in almost every country in the world.

        There are also huge numbers of illegal pseudo-MLM's, pretending to be MLM, and fooling most of the people, most of the time. These are for the most part a mixture of "Ponzi schemes" and "pyramid schemes" (two very different things).

        The two commonest "hallmark distinctions" of the ones pretending to be MLM are (i) payment for recruitment/sponsoring rather than purely on sales of the company's products/services, and (ii) (in the US only, but increasingly enforced) failure to derive a minimum of 70% of sales commissions from genuine retail sales to genuine retail customers.

        There's much consideration and discussion of all these points on the blog of noted industry expert Yuliya Mironova. (That's actually about "network marketing" rather than MLM, strictly speaking, but most - not all - network marketing is also MLM).
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    • Profile picture of the author whiteshadow1890
      Banned
      Originally Posted by Charlotte Jay View Post

      You'll have to elaborate on what you mean a little more before I give my answer.
      A system that for every referrer you bring you get let's say 10$, and for every referrer that is being referred by your referrer you get 10*5. System goes like this:
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      • Profile picture of the author Alexa Smith
        Banned
        Originally Posted by whiteshadow1890 View Post

        A system that for every referrer you bring you get let's say 10$, and for every referrer that is being referred by your referrer you get 10*5.
        Payment for sponsorship is illegal in all of North and almost all of South America, all of Europe, almost all of South-East Asia, Australia, New Zealand and South Africa. It's legal only in Russia, some of Central America, most of the rest of Africa and a few other very small countries. The $10 payments to which you refer, in order to be legal, can only be for the commissionable element of products purchased by incoming distributors (and in the US must account for less than 30% of the company's sales volume. Many companies are currently breaking the law over this last point, and the prosecutions are "piling up").

        Originally Posted by Charlotte Jay View Post

        in a few MLM's (now called direct sales by some)
        This is perfectly true, but MLM is actually only a very small sub-set of "direct sales". Tens of thousands of companies, worldwide, are "direct sales companies" without having anything to do with either network marketing or MLM.

        Good luck with your new company!

        (I was in one for nearly a year - rather a good one, but eventually decided it wasn't really for me).
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  • Profile picture of the author Charlotte Jay
    That's what I thought you meant. Ok, well as Alexa said it is legal in many countries, but it has to adhere to the rules that define a MLM, otherwise it's just a ponzi or pyramid scheme. I've been involved in a few MLM's (now called direct sales by some) and I just hopped on board with another one, but only because I use the product and believe in it. Also, the company has an A++++ reputation for paying it's reps.
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